China

Transition to a Market Economy

Oxford UP, 1997

15 min read

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China’s transition from a planned economy to a market economy isn’t as great as it may seem from outside, or as erratic as it may seem from the inside.

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China is still an enigma to many business people and investors who wonder about the extent to which the country really will participate in a market economy. This book provides a strong, yet concise, review of the history and results of China’s transition from a planned economy to a market economy. Author Joseph C. H. Chai covers the Chinese government’s reform efforts across several economic sectors, including agricultural, industrial, financial, trade liberalization and foreign direct investment. The chapter on non-state sector business fully rounds out Chai’s portrait of the current state of the Chinese economy. getabstract.com recommends this fascinating book to anyone who wants a scholarly review of the economic issues facing China before, during and after market economy reforms. The better your knowledge of economics, the more useful this book will be to you, but even so, it will intrigue any reader who has more than a passing interest in China.

Summary

Transition from a Planned Economy

China’s movement from a planned economy to a market economy is littered with good intentions. Compared to transitions in Central and Eastern European countries, it has been relatively smooth. Aside from the 1989 Tiananmen Square demonstrations, little serious political or social upheaval can be attributed to the economic transition. Yet, during similar transitions, the Soviet Union and Czechoslovakia disintegrated politically. The early stages of market economy transitions in Central and Eastern Europe saw a sharp drop in output and employment, and increased social and political instability. In contrast, the Chinese economy experienced an annual 9% rise in output during the past 15 years of transition. Given such results, some experts see China’s reform as a model for other socialist countries.

The origins of China’s market reforms can be traced back to the decades from 1957 to 1978, when the centralized planning system averaged only 5% annual economic growth. The sluggish pace of growth eroded the government’s credibility for several reasons. One was the obvious and growing disparity between the Chinese standard of living and that...

About the Author

Joseph C. H. Chai is senior lecturer in economics at the University of Queensland. Previously, a Research Fellow at Centre for Chinese Studies, Oxford University, and the Harvard-Yenching Institute, Harvard University, he has also been senior lecturer in economics at the University of Hong Kong.

Joseph C. H. Chai

China

Transition to a Market Economy

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Transition from a Planned Economy

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